Friday Five

The Friday Five: Blank Sailings Under Scrutiny

July 24, 2020

Two FMC commissioners want closer review of blank sailing monitoring - JOC

In an interview this week, Carl Bentzel, one of two Federal Maritime (FMC) Commissioners taking issue with the timeliness in which carriers notified them of blank sailings, stated he “wasn’t completely satisfied”, as alliances cut and added capacity in response to the pandemic-driven decline in container volumes. Two out of the 5 FMC commissioners are “not looking for a formal investigation”, but said a review of how the agency tracks blank sailing and impacts the market is warranted.    

Following double-digit declines in container volumes, container lines reduced container slot space on the trans-Atlantic and trans-Pacific trades, leading to elevated container spot rates (up 70% YoY), rolled cargo, and premiums to ensure that cargo will be loaded onto the ship as scheduled.

Carriers are being accused of cutting capacity too aggressively so they can maintain — and even increase — spot freight rates. 

It was also reported that World Fleet Speed Average is down 17.4% from a decade ago. It appears when Carriers implemented slow steaming back in 2008 they never really retreated back to full speed. Will be interesting to see if the same holds true for these rapid-response type blanked sailings and capacities going forward. 

Maersk to levy manual change fees in September - JOC


On Tuesday, Maersk Line announced it will start charging shippers that make manual booking and documentation amendments starting Sept. 1. Customers in the US and Canada will be hit with fees for changing bookings or documentation by phone or e-mail; $50 for a booking amendment and $75 for a documentation amendment. 

The extra costs can be avoided by using Maersk’s online portal or non-Maersk electronic platforms, in a move designed to incentivize users toward digitization. 

On Thursday, Hapag-Lloyd vowed to ‘significantly lower the number of rolls and make the lives of our customers a lot easier’ launching their  “loaded as booked” quality initiative, promising to load more than 95% of their confirmed bookings on the exact ship specified in the reference or first booking confirmation.

‘Fragile’ Supply Chain Pushes Whirlpool’s Backlog Out Quarters - Bloomberg

Spacing factory employees further apart to prevent COVID-19’s spread has resulted in the dramatic slowing of manufacturing throughput and production capacity at Whirlpool Corp., so much so, their CFO advised that his delivery backlog has stretched from the typical one to two-weeks to over two-quarters long. Further exacerbating the problem, the company’s parts suppliers in Mexico are facing the same issues, resulting in a vicious bullwhip effect. From “JIT” to hopefully “this year”, Consumers will just have to be patient while demand continues to outpace their supply. 

“...Industries across the globe are adapting to a complicated supply chain full of new expenses, cancellations, and delays,” Jim Peters, Whirlpool’s chief financial officer said in a video interview after the company reported second-quarter results.

Walmart's planned South Carolina warehouse will increase Port of Charleston volume 5% - Supply Chain Dive 

On Monday, the South Carolina Ports Authority announced that  Walmart will build a direct import distribution center in Dorchester County, South Carolina that will increase the retailer's throughput at the neighboring Port of Charleston. Last year, Walmart moved about 8,208 TEUs (3.7% of its imports) through the southeastern gateway (FY June 30, 2020). 

The $220 million, 3 million-square-foot facility will support about 850 Walmart stores and Sam’s Clubs and several regional distribution centers, expecting to increase the port's volume by 5%. 

76% of the imports to Charleston come from China and 81% of them are being handled by CMA CGM, according to data shared with Supply Chain Dive.

The rail-served location is 35 miles from the Port of Charleston and Walmart is the first tenant as the facility called the Ridgeville Commerce Park, located near Ridgeville, South Carolina, on a 1,000-acre plot of land the port bought in 2018. The groundbreaking on the facility is expected to happen in March 2021.

Tesla to build newest Gigafactory in Texas - FreightWaves 

During the company’s earnings call on Wednesday, chief executive Elon Musk announced that Tesla will build its newest Gigafactory near Austin, Texas. The Site will be used to build Tesla’s Cybertruck, Semi, and Model 3 and Model Y. 

With the Tesla semi-truck expected to begin production this year, the 2,000-acre site’s added production capacity will come in handy. Travis County, Texas, is offering Tesla tax breaks worth a minimum of $14.7 million to build the plant and bring jobs to the area. While Musk cautioned “we have a long way to go”, Anheuser-Busch has reportedly already placed an order for 40 of the electric semis. 

 

Happy Friday folks! 

Don’t forget to check out last week’s news and, as always, come back next week for the next Friday Five Logistics News Roundup!

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